FSS Orders Woori and IBK to Compensate Lime Victims Up to 78%
Results of the Financial Dispute Mediation Committee by the Financial Supervisory Service on the 24th
Basic Compensation Ratio: Woori Bank 55%, Industrial Bank of Korea 50%
[Asia Economy Reporter Wondara] Woori Bank and Industrial Bank of Korea have been ordered to compensate Lime fund investors for up to 78% of their investment losses.
On the 24th, the Financial Supervisory Service (FSS) announced the results of the Financial Dispute Mediation Committee (hereafter, the Mediation Committee), deciding the compensation ratio for three Lime fund investment loss cases to be between 65% and 78%. The basic compensation ratios for Woori Bank and Industrial Bank of Korea were 55% and 50%, respectively, adjusted according to the banks' increased responsibility factors and investors' self-responsibility factors on a case-by-case basis.
This basic compensation ratio is 5 percentage points lower than the 60% basic compensation ratio set by KB Securities last December. An FSS official explained that the reason Woori Bank and Industrial Bank of Korea have lower basic compensation ratios than KB Securities is because "KB Securities had more access to information due to loan transactions with Lime but still engaged in incomplete sales, whereas the banks only handled sales operations."
The Lime fund sales volume for Woori Bank and Industrial Bank of Korea amounts to approximately 270 billion KRW and 28 billion KRW, respectively. Following the confirmation of this basic compensation ratio, the two banks must also proceed with adjustments for the remaining affected investors. The FSS plans to facilitate voluntary adjustments with compensation ratios ranging from 40% to 80% for individual investors (30% to 80% for corporations), which will bring relief to the unpaid 298.9 billion KRW (1,590 accounts) affected by redemption delays.
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Meanwhile, the upcoming FSS disciplinary hearing for Woori Bank scheduled for the 25th is expected to reflect the contents of this Mediation Committee decision. Previously, the FSS had pre-notified Woori Bank Chairman Sohn Tae-seung of a 'suspension of duties' disciplinary action.
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